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Social finance: Untapping resources so everyone benefits
If you’re reading this, wondering what social finance is, you’re not alone.
An estimated 70 percent of social enterprises in Indonesia are in the pre-seed or seed stage and require as little as $10,000 to $100,000 to be able to grow.
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The beautiful Jatiluwih rice terraces in Tabanan, Bali, Indonesia. (shutterstock.com/ALINAT17/File)
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bag of rice is a simple, everyday product. At social enterprise Javara, one bag of black rice indigenous to central Java tells an incredible story about cultural preservation and poverty reduction.
Today, Javara distributes rice, coconut sugar, and gluten free flours sourced from smallholder farmer communities and artisan food processors. The company’s positive impact is both direct and indirect. By partnering with several local organizations such as the NGO Sahabat Cipta in Flores, Eastern Indonesia, Javara gain access to positively impacts the livelihoods of more than 50,000 Indonesian farmers.
However, seeking investment to scale up the operations wasn’t easy for Javara as most the of the capital available (banks, impact investors for example) did not fit the company’s vision. Javara relied mostly on trusted family and friends to finance the growth. A new 'social finance' model, better fitting the needs of the Indonesian social enterprise can play a powerful role in achieving sustainable development goals.
Javara is made possible because of “impact investors,” or companies that fund enterprises to generate social or environmental impact alongside a financial return.
Today, Javara sells food products like organic snacks, handicrafts and heritage varieties of rice, produced by communities in poorer parts of Indonesia, in the competitive marketplace.
This is “social finance” in action. And it’s a new and powerful way to achieve sustainable development. Social financing is ushering in a new era of sustainable development around the world.
However it’s very much in its infancy in Indonesia. If you’re reading this, wondering what social finance is, you’re not alone.
It refers to bringing capital or investment to enterprises that produce social and environmental benefits as well as financial profits. Social finance covers various forms of private funding such as impact investors, angel investors, crowd funding or venturecapital that support social enterprises (SEs).
